State Budget Office: Greece seems to be exiting the crisis

“Greece seems to be exiting the crisis” the State Budget Office in Parliament said in its quarterly report released on Monday.

The report, for the period July-September 2017, recorded a significant progress achieved in the country’s relations with the institutions, including the IMF. The authors of the report noted that a new element was a rapprochement with the United States, a significant development for security and economic reasons.

The report, coordinated by professor Panagiotis Liargovas, recorded a series of positive developments in the Greek economy in the third quarter of the year, such as completion of the second program review, the country’s exit from an excessive fiscal deficit procedure and a decline in state bond yields to the lowest levels in recent years (5.33 pct).

The report stressed that a return to capital markets did not mean entry into a phase without fiscal or other constraints. “Greece, even if all goes well, will be subject to existing fiscal governance limitations of the EU and the Eurozone,” it said, adding that “even a clean exit to markets does not mean exit from every supervision. Additionally, any possible precautionary support line and even more debt relief measures will be accompanied by economic supervision”.

The report said that short-term growth prospects improved, with the economy expected to return to positive growth rates this year (1.8 pct), while the state budget envisages a 2.4 pct growth rate. The authors of the report underlined that according to estimates the Greek economy needed investments worth more than 100 billion euros in the five-year period from 2017 to 2022. They also noted that the “scars” caused by the crisis were visible on the economy. Several Greek enterprises continue to flee to Bulgaria and Cyprus, to take advantage of lower tax rates, easier banking borrowing and generally a more friendly investment policy.

The State Budget office noted that the state mechanism, under the current legal system, continued to raise hurdles to large investment plan and the ability of the banking system to fund productive investments was limited by the huge non-performing loans. Certain reforms are implemented, though slowly, and crucial decisions have been postponed for 2018. The country still remains vulnerable to any external shocks due to its excessive public debt.

The State Budget Office recommended that the government accelerates structural reforms, intensifies efforts to address NPLs, continues efforts to strengthen social cohesion, completes a spending review, combats tax evasion, encourages progress in NPLs, utilizes fully all possible sources of European funding, executes smoothly the state budget and continues repayment of state arrears to the private sector.